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Paracetamol is the most commonly prescribed analgesic – used to cure pain and fever. This over-the-counter (OTC) drug is sold across the world under various names – such as Tylenol, Panadol, Crocin and Dafalgan. Almost everyone, irrespective of their age, nationality, socio-economic status and ethnicity, has consumed paracetamol at some point of time.
In view of the recent headlines about drug prices increases and manufacturing non-compliance problems in Asia, this week PharmaCompass decided to look at the pricing of paracetamol to assess if consumers get the quality they pay for.
Also known as acetaminophen or APAP, paracetamol is a ‘commodity API’ (active pharmaceutical ingredient). Across the world, consumers buy paracetamol tablets at different prices.
On the supply side, APAP is purchased in metric tons by buyers who monitor the market like hawks, and ensure they don’t lose their competitive edge due to the slightest shift in market trends.
PharmaCompass studied the price trends in paracetamol based on Indian custom trade statistics. According to our analysis, the current pricing levels for this API are in the range of US $ 4,000 to US $ 5,000 per metric tonne.
If it isn’t the paracetamol, what do consumers pay for?
We know that the price of paracetamol varies within, as well as across markets. But how much does a tablet actually cost?
PharmaCompass compiled the cost contribution of paracetamol in the actual price of the finished product across various markets (refer table). The findings were shocking.
The actual contribution of paracetamol in the lowest priced markets is never more than 15 percent of the cost of the tablet. In many markets – like the US and UK – it’s even lower than 2 percent.
|
Brand Name |
Country |
Dosage Strength |
Unit |
Tablets |
Currency |
Price |
Total Paracetamol (g) |
Retail Cost per kg (USD) |
Cost of API as a % of retail price |
|
Tylenol |
United States |
325 |
Mg |
100 |
USD |
32.50 |
294.77 |
1.42% |
|
|
Dafalgan |
France |
500 |
Mg |
16 |
Euro |
8.00 |
145.80 |
2.88% |
|
|
Panamax |
Australia |
500 |
Mg |
100 |
AUD |
50.00 |
86.80 |
4.84% |
|
|
Panadol Advance |
United Kingdom |
500 |
Mg |
16 |
GBP |
8.00 |
268.13 |
1.57% |
|
|
ASDA |
United Kingdom |
500 |
Mg |
16 |
GBP |
8.00 |
33.96 |
12.37% |
|
|
Crocin |
India |
500 |
Mg |
1 |
INR |
0.5 |
31.04 |
13.53% |
Therefore, if a paracetamol tablet – sold as Crocin in India – costs around Re 1 (it actually costs Re 1.04 or USD 0.015), the cost of the API in the tablet is only around 15 paisa (USD 0.002).
If even another 25 paisa go towards manufacturing the tablet in its finished form, more than 60 percent of the price consumers pay is for other things – such as marketing and towards the margins of distributors, retailers etc.
It’s all about fancy packaging and marketing
Historically, pharmaceutical manufacturers have maintained that you get the quality you pay for.
That, according to them, explains the significant difference in the price of products in regulated markets when compared with the less regulated ones. But that rule doesn’t seem to apply to paracetamol.
Any best-selling branded paracetamol contains the same API as its cheaper generic alternative. In fact, according to surveys, consumers could be paying 11 times more for branded paracetamol, as opposed to an unbranded one bought from stores like ASDA and Tesco in the UK. It’s not just the UK, but in every country you will find paracetamol (as also other OTC drugs) being sold at difference prices.
Surveys done in the UK on paracetamol, in 2012, found that the brand Panadol costs £1.65 for 16 tablets – 11 times more than paracetamol at ASDA or Tesco.
Today at these super-markets, consumers pay as little at 19 pence for the same size packet. And both the versions contain 500mg of paracetamol per tablet and the quality of both is monitored by the Medicines and Healthcare Products Regulatory Agency (MHRA).
The same survey found the rule also applied to Nurofen, the best-selling painkiller with Ibuprofen (an API). While the branded variant -- Nuromol – cost £3.99 for 12 tablets, the unbranded variant sold for just 43 pence at super-markets.
Unknowingly consumers, even today, pay extra for the same tablet coming in colourful, branded packaging.
The less regulated the market, the higher the cost
Interestingly, our research found the price of bulk paracetamol in markets that are “less regulated” (such as the less developed countries in Asia and Africa) to be higher than the price of this drug in regulated markets like the United States and Europe.
Since there is lesser demand in these countries, suppliers are able to command a higher price from their customers.
Even though consumers in the less regulated markets pay more, it is for customers in the regulated markets that drug manufacturers keep making investments – be it in the facilities or the quality systems.
Non-compliance to regulations affects consumers worldwide
We often read about regulatory action by European and US authorities against bulk drug manufacturers in China and India. But if you think non-compliance to regulatory norms only affects the developed markets, you are mistaken. Most bulk drugs are sourced from the same suppliers worldwide.
Last year, serious issues of non-compliance were found by regulators at major paracetamol API manufacturers like Novacyl and Sri Krishna Pharmaceuticals. In early 2015, India’s large paracetamol manufacturer, Sri Krishna Pharmaceuticals, received a non-compliance report from the Italian Ministry of Health AIFA.
A few months later, France-based Novacap’s subsidiary -- Novacyl – received a warning letter from the US Food and Drug Administrator (FDA) for its aspirin producing facility in Thailand. Novacyl produces almost 7,000 metric tonnes of aspirin from its facilities in Thailand and Saint-Fons in France.
Three months before Novacyl’s Thailand facility received a warning letter, its facility in Wuxi China which produces paracetamol, was found out of compliance by the FDA.
Our view
In view of the growing non-compliances, the global healthcare systems need to find ways to ensure better quality of APIs.
Since the cost of the API in a paracetamol tablet is fairly low – ranging from 1.5 percent to 15 percent – the healthcare systems need to find ways to compensate API producers if they want better quality.
Online pharmacies for OTC medicines could be a possible solution. Not only will online platforms increase access to OTC drugs for consumers, they also provide manufacturers an opportunity to circumvent the current models of distribution and marketing.
Alongside, consumers need to become aware about the source of their bulk drugs, the differential pricing which exists and the quality issues related to them.
This way, we hope the quality issues in bulk drugs can get addressed, benefitting consumers worldwide.
After all, you should get what you pay for.
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“ The article is based on the information available in public and which the author believes to be true. The author is not disseminating any information, which the author believes or knows, is confidential or in conflict with the privacy of any person. The views expressed or information supplied through this article is mere opinion and observation of the author. The author does not intend to defame, insult or, cause loss or damage to anyone, in any manner, through this article.”
